Before the Bell€¦ · resume next month is the point that Washington plans to increase tariffs to 30% from 25% on roughly $250 billion in Chinese imports starting on October 1

Notations:

• For further information on any of the topics mentioned, please contact your Financial Advisor. • Unless specifically stated otherwise, comments contained in this document should not be construed as an investment opinion or

recommendation of any securities mentioned. Charts depicted are from FactSet unless otherwise noted. ____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. Page 1 of 12

Before the Bell Morning Market Brief

September 5, 2019

FOR IMPORTANT DISCLOSURES, PLEASE SEE THE DISCLOSURE PAGES AT THE END OF THIS DOCUMENT

MORNING MARKET COMMENTARY: Anthony M. Saglimbene, Global Market Strategist

• Quick Take: U.S. futures are pointing to a higher open; European markets are trading in the green; Asia ended positively overnight; West Texas Intermediate (WTI) oil trading at $56.60; 10-year U.S. Treasury yield at 1.53%.

• Can Markets Hold Their Ground in the Face of Outstanding Risks? As we highlighted yesterday, investors could increasingly engage in a tug-of-war between determining if the U.S. economic expansion is in its final stages of the current expansion, or if we could we be entering just another temporary lull as we have seen previously in this cycle. Each scenario would have a material impact on where corporate profits are headed, and as a result, where stock prices are headed. Equity prices are essentially flat over the last year, sentiment is weak, economic data is mixed (at best), and investors are clamoring for safety in bonds. We believe all of this points to a degree of caution and an acknowledgment that the macro backdrop is weaker today than it was a few months ago.

• Nevertheless, the tug-of-war among the ‘glass-half-full’ and ‘glass-half-empty’ crowd implies there is data on both sides that support the arguments. Below we take a quick, high-level macro view of why investors are torn between taking a more pronounced stand in the market today as well as why stocks have bounced around over the last year.

• As the first BCA Research chart shows, asset levels in relation to their percentage of GDP (or economic growth) are currently extended in many areas of the globe and relative to their history. This could imply a more meaningful pullback in asset prices (if it were to occur), and one where such conditions were lasting, may contribute to tightening financial conditions. Outside of valuation considerations or profit growth trends, a tightening in financial conditions could be a worrisome development and one that could counter easier monetary policy out of the Federal Reserve. This would be a clear negative for market bulls.

Before The Bell September 5, 2019 ____________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________ © 2019 Ameriprise Financial, Inc. All rights reserved. Page 2 of 12

• Another troubling sign for the bulls is that the Federal Reserve has much less room to maneuver if further accommodation in the economy is truly needed. As the second BCA Research chart below highlights, the zero-bound in rates could be approached quickly if more than one or two ‘insurance cuts’ are needed to stabilize economic conditions. During past cycles, the Fed has had much more room to lower rates and cushion economic downturns than they will have during the next downturn. The point? The Fed may have to employ more extraordinary tools to stabilize the economy in the next economic contraction. Depending on the magnitude of the slowdown, this could be highly disruptive for asset prices, including stocks, as investors try to adjust to possible monetary actions never enacted here in the U.S. As recession worries have grown over recent weeks, the Fed’s ability to counteract a slowdown is increasingly being called into question.

• Yet, U.S. economic conditions in some key pockets are holding up fairly well, despite more pronounced slowing in other major economic regions. A strong U.S. consumer, to some extent, has contributed to keeping corporate profit growth at expected levels, which we believe has helped buoy stock prices here at home over recent months.

• As the BCA Research chart at right shows, the falloff in manufacturing activity this year across several areas of the globe has not been matched by an equally sharp decline in the services side of the economy. Thus far, much of the slowdown in economic activity this year has been borne by manufacturing. On the other hand, services, which is a much larger portion of economic activity for all developed countries, has held up well. For the glass-half-full crowd, this may suggest the slowdown is more in line with the 2015-2016 episode (i.e., a growth slowdown) as opposed to an outright recession.

• Lastly, it’s difficult to have a large drawdown in economic growth when workers around the world are employed and earning a wage. As the last BCA Research chart shows, unemployment rates around the globe have been falling and showing little evidence of stress. Since the financial crisis, unemployment rates have steadily fallen and have continued to decline, even considering this latest slowdown.



Labor markets are tight. Until layoffs and jobless claims show a sustained and material increase from current levels, we believe the global consumer’s major source of income and spending (their job) could be supportive of corporate earnings and thus asset prices.

• As we said above, there is likely to be a building tug-of-war between investors that think conditions will improve over time, and investors who think conditions will worsen. What hasn’t been discussed here is the potential for a continuation of current conditions that cause asset prices to spin in a directionless motion with fits and starts of volatility along the way. That condition is the one that investors have found themselves in for roughly the last year. This week’s back and forth market movement, the most recent example. Importantly, a material shift in the market or economy does not necessarily need to break one way or the other over the intermediate-term. Instead, both can drift in this uncertain environment for an extended period. As such, investors should be diligent about the risks they are taking, own quality investments and be a little more cautious than they normally would.

• Asia-Pacific: Asian equities finished higher on Thursday. According to multiple reports, the U.S. and China have agreed to hold face-to-face talks in early October. As a result, global equity prices are higher, with pre-market activity in the U.S. pointing to a stronger open.

• Although Washington expected talks to proceed this month, growing tensions and a new batch of tariffs against U.S. and Chinese imports starting on September 1st dampened progress last month. In a phone call, between Chinese Vice-Premier Liu, U.S. Trade Representative Lighthizer and U.S. Treasury Secretary Mnuchin, both sides agreed to a framework to restart trade discussions. The phone call was their first since August 13th.

• Digging a little deeper, however, both sides have a somewhat different take on what the next few weeks will look like leading up to a potential October meeting. The USTR confirmed that ministerial-level discussions would take place over the next few weeks without a firm commitment to a higher-level meeting in October, while language from China indicated an October meeting was more certain. The U.S. appears to be looking for meaningful progress in lower-level meetings over the next few weeks, and before ultimately committing to an October meeting.

• Regardless, investors are taking the news today as positive for asset prices. It was also unlikely any progress on trade was going to be made this month and considering the upcoming celebration of the 70th anniversary of the People’s Republic of China. China President Xi Jinping is very unlikely to make any concessions where he could look weak ahead of next month’s celebration.

• Following Hong Kong leader Carrie Lam’s withdrawal of the controversial extradition bill yesterday, skepticism is growing that the move will quell pro-democracy activists. Protesters in aggregate have suggested the move is too little too late and want other demands to be met as well. These include electing their own leaders, an independent inquiry into police conduct, amnesty for arrested protestors, and a halt in characterizing the protests as “riots.”

• Europe: Markets across the region are trading higher at mid-day. As expected, UK Prime Minister Boris Johnson lost two key parliamentary votes yesterday that may now limit his ability to negotiate a different Brexit deal with the European Union (EU) or enact a no-deal Brexit at the end of October. MPs passed legislation that will now move to the House of Lords that requires Mr. Johnson to seek a Brexit extension until January 31st if a deal is not secured with the EU by October 19th.



• Also, MPs rejected Mr. Johnson’s demand for new elections, essentially tying his hands and making it very difficult for him to exit the EU without a Brexit deal on October 31st. Nevertheless, opposition parties are divided on how to proceed and do not have a concrete plan on how to exit the EU. Per the Financial Times, Labour leader Corbyn is planning a no-confidence vote on Mr. Johnson as early as Monday. Other reports suggest opposition parties may agree to new elections after the no-deal Brexit bill is formally put into law.

• German factory orders fell 2.7% m/m in July, which was worse than expectations, and reversed the +2.5% increase reported in June. A rise in trade tensions, concerns about Brexit, and modest expectations for growth from businesses are weighing on manufacturing activity. Note: Germany is Europe’s largest economy and a critical hub for manufacturing activity in the region. Hence, trends in economic activity across Germany can be very influential and provide important insight into Europe as a whole. The data increases the risk of a technical recession in Germany and considering other data that shows manufacturing activity has softened over recent months.

• U.S.: Equity futures are pointing to a stronger open this morning. Also complicating the potential for trade talks to resume next month is the point that Washington plans to increase tariffs to 30% from 25% on roughly $250 billion in Chinese imports starting on October 1st. With the White House already skeptical of any meaningful progress coming from Beijing, and China’s unwillingness (so far) to make concessions without a reprieve from existing tariffs, we believe further discussions seem less likely to break this impasse.

• The other large question: Does China retaliate against the increase in tariffs on October 1st, and if the U.S. moves ahead with its plan to ramp up the pressure on Beijing? Such moves would complicate the path forward for trade discussions next month and leave the trade macro worse, not better over the coming weeks. While we would like to be more positive about today’s U.S./China headlines, we’ve been here before a couple of times. Each time, the trade situation has deteriorated at some point.

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WORLD CAPITAL MARKETS 9/5/2019 As of: 8:30 AM ET

Americas % chg. % YTD Value Europe (Intra-day) % chg. %YTD Value Asia/Pacific (Last Night) % chg. %YTD ValueS&P 500 1.08% 18.84% 2,937.8 DJSTOXX 50 (Europe) 0.87% 19.75% 3,480.8 Nikkei 225 (Japan) 2.12% 6.68% 21,085.9 Dow Jones 0.91% 14.97% 26,355.5 FTSE 100 (U.K.) -0.64% 11.92% 7,264.5 Hang Seng (Hong Kong) -0.03% 5.68% 26,515.5 NASDAQ Composite 1.30% 21.14% 7,976.9 DAX Index (Germany) 0.82% 14.82% 12,123.3 Korea Kospi 100 0.82% -1.34% 2,004.8 Russell 2000 0.85% 11.09% 1,484.8 CAC 40 (France) 1.07% 21.65% 5,591.2 Singapore STI 0.53% 6.18% 3,147.1 Brazil Bovespa 1.52% 15.15% 101,201 FTSE MIB (Italy) 0.71% 19.48% 21,892.9 Shanghai Comp. (China) 0.96% 19.73% 2,985.9 S&P/TSX Comp. (Canada) 0.30% 17.19% 16,448.8 IBEX 35 (Spain) 1.18% 7.97% 8,961.2 Bombay Sensex (India) -0.22% 2.62% 36,644.4 Mexico IPC 1.19% 3.82% 42,324.5 MOEX Index (Russia) 0.40% 24.91% 2,804.5 S&P/ASX 200 (Australia) 0.92% 22.26% 6,613.2

Global % chg. % YTD Value Developed International % chg. %YTD Value Emerging International % chg. %YTD ValueMSCI All-Country World Idx 1.16% 14.94% 513.6 MSCI EAFE 1.09% 11.23% 1,858.2 MSCI Emerging Mkts 1.78% 4.84% 990.6 Note: International market returns shown on a local currency basis. Equity index data is total return, inclusive of dividends.

S&P 500 Sectors % chg. % YTD Value Commodities Communication Services 1.61% 21.91% 167.5 Equity Income Indices % chg. % YTD Value Futures & Spot (Intra-day) % chg. % YTD ValueConsumer Discretionary 0.86% 22.09% 945.1 JPM Alerian MLP Index 0.73% 3.89% 23.1 CRB Raw Industrials 0.34% -7.44% 444.7 Consumer Staples 0.92% 22.96% 630.2 FTSE NAREIT Comp. TR 0.84% 28.56% 21,335.8 NYMEX WTI Crude (p/bbl.) 0.11% 24.03% 56.3 Energy 1.39% 3.08% 425.6 DJ US Select Dividend 1.06% 12.93% 2,100.9 ICE Brent Crude (p/bbl.) 0.36% 13.23% 60.9 Financials 1.08% 14.27% 445.5 DJ Global Select Dividend 1.40% 1.13% 209.1 NYMEX Nat Gas (mmBtu) -0.82% -17.52% 2.4 Health Care 0.01% 5.17% 1,040.3 S&P Div. Aristocrats 1.05% 16.96% 2,803.6 Spot Gold (troy oz.) -1.09% 19.73% 1,535.6 Industrials 1.30% 18.84% 635.4 Spot Silver (troy oz.) -2.03% 23.90% 19.2 Materials 1.08% 13.80% 355.0 LME Copper (per ton) 2.50% -3.78% 5,724.3 Real Estate 0.85% 31.27% 247.7 Bond Indices % chg. % YTD Value LME Aluminum (per ton) 1.26% -6.25% 1,746.3 Technology 1.71% 29.97% 1,399.2 Barclays US Agg. Bond 0.07% 9.38% 2,238.6 CBOT Corn (cents p/bushel) 0.56% -9.31% 360.5 Utilities 0.15% 22.57% 322.0 Barclays HY Bond 0.13% 11.01% 2,119.7 CBOT Wheat (cents p/bushe 1.19% -14.06% 466.3

Foreign Exchange (Intra-day % chg. % YTD Value % chg. % YTD Value % chg. % YTD ValueEuro (€/$) 0.24% -3.54% 1.11 Japanese Yen ($/¥) -0.48% 2.61% 106.90 Canadian Dollar ($/C$) 0.14% 3.27% 1.32British Pound (£/$) 0.72% -3.24% 1.23 Australian Dollar (A$/$) 0.34% -3.25% 0.68 Swiss Franc ($/CHF) -0.29% -0.15% 0.98Data/Price Source: Bloomberg. Equity Index data is total return, inclusive of dividends, where applicable.

Ameriprise Global Asset Allocation Committee U.S. Equity Sector - Tactical View

S&P 500 GAAC GAAC S&P 500 GAAC GAACIndex GAAC Tactical Recommended Index GAAC Tactical Recommended

Sector Weight Tactical View Overlay Weight Sector Weight Tactical View Overlay Weight

1) Communication Services 10.2% Underweight - 2.0% 8.2% 6) Health Care 14.3% Overweight +2.0% 16.3%

2) Consumer Discretionary 10.2% Equalweight - 10.2% 7) Industrials 9.3% Equalweight - 9.3%

3) Consumer Staples 7.3% Equalweight - 7.3% 8) Information Technology 21.6% Overweight +2.0% 23.6%

4) Energy 5.0% Equalweight - 5.0% 9) Materials 2.7% Equalweight - 2.7%

5) Financials 12.9% Underweight - 2.0% 10.9% 10) Real Estate 3.1% Overweight +1.0% 4.1%

11) Utilities 3.4% Underweight - 1.0% 2.4%

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 6/21/19. Numbers may not add due to rounding.

Ameriprise Global Asset Allocation Committee Global Equity Region - Tactical View

MSCI All-Country GAAC GAAC MSCI All-Country GAAC GAACWorld Index GAAC Tactical Recommended World Index GAAC Tactical Recommended

Region Weight Tactical View Overlay Weight Region Weight Tactical View Overlay Weight

1) United States 55.5% Overweight +4.3% 59.8% 5) Latin America 1.5% Equalweight - 1.5%

2) Canada 3.0% Equalweight - 3.0% 6) Asia-Pacific ex Japan 12.2% Equalweight - 12.2%

3) United Kingdom 5.0% Underweight - 1.0% 4.0% 7) Japan 7.0% Underweight - 1.0% 6.0%

4) Europe ex U.K. 14.5% Underweight - 1.0% 13.5% 8) Middle East / Africa 1.3% Underweight - 1.3% -

Index weighting represents relative weightings based on the regional market capitalization balance of the MSCI All-Country World Index; may not add due to rounding. The GAAC Tactical Overlay, as well as Recommended Tactical Weights, is derived from the Ameriprise Global Asset Allocation Committee (GAAC).Views are expressed relative to the Index and are provided to represent investment conviction in each region. Tactical Allocations are designed to augment Index returns over a 6-12 month time horizon. Index weights as of 6/21/19. Numbers may not add due to rounding.



BY THE NUMBERS: ECONOMIC ACTUALS AND FORECAST:

ECONOMIC NEWS OUT TODAY: Economic Releases for Thursday, September 5, 2019. All times Eastern. Consensus estimates via Bloomberg. Time Period Release Consensus Est. Actual Prior Revised to 8:15 AM AUG ADP Employment +140k +195k +156k +142k 8:30 AM Aug. 31 Initial Jobless Claims 215k 217k 215k +216k 8:30 AM Aug. 24 Continuing Claims 1700k 1662k 1698k +1701k 8:30 AM Q2 F Labor Productivity +2.2% +2.3% +2.3% 8:30 AM Q2 F Unit Labor Costs +2.5% +2.6% +2.4% 10:00 AM JUL Factory Orders +0.9% +0.6% 10:00 AM AUG ISM Non-Manufacturing Index 53.8 53.7 Economic Perspective: Russell T. Price, CFA – Chief Economist • A strong ADP Employment number for August comes with a sigh of relief. Given the somewhat steady signs of an

economy that is moderating here in the U.S. (though still expanding at a solid rate, in our view), combined with the elevated trade-related concerns that pervaded during the month, estimates of job growth for August appeared to come with a heavy dose of trepidation. As such, the +195,000 reported this morning, being the best pace in four months, should at least help assuage “cliff” fears for the economy for a while longer at least.

• There were modest negative revisions to the prior two months amounting to a reduction of 15,000. We do not see this as consequential to the overall message of the series, but it does shave a bit of outperformance from the August numbers.

• Neither does today’s report likely have material implications for the Fed policy decision later this month (with the FOMC decision scheduled for September 18th). Currently, CME fed funds futures reflect near 100% market expectations (99.6%) of 25-basis point cut at the meeting and just 0.4% of a 50-basis point reduction.

• Today’s ADP report leaves its 3-month average of private sector job growth at +149,000 and the 6-month average for the series at +151,000. The numbers represent a deceleration with those of 2018 levels but as we have noted many times the slower pace is also representative of the much tighter job market and the fact that fewer available workers are still on the sidelines.

• Small companies (50 or fewer employees) were a source of strength in August after being a source of weakness in July. The segment was shown to have added 66,000 net new workers versus just 1,000 in July. However, Medium sized companies (50 to 500 employees) also had a good month, with job growth hitting a 4-month high of 77,000. Large companies (500+) also added a healthy 52,000 net new jobs.

• Estimates for tomorrow’s Labor Department report currently stand at +160,000, according to Bloomberg. Though the estimates could rise modestly before the report, we note that the ADP and Labor Department measures usually have the strongest correlation between the medium and large business segments, thus we do not expect estimates are likely to be revised materially.

• Putting the ISM Manufacturing Index in context: We’ve been here before, but it is likely to get worse. Earlier this week, the Institute of Supply Management (ISM) released its Manufacturing Index for August. The report’s headline measure of business activity posted a reading of 49.1. This was well below the Bloomberg consensus of 51.5, a drop from its July reading of 51.2, the first “sub-50” reading since August 2016, and the lowest absolute reading since January 2016. It just wasn’t very good.

Current Projections:Actual Actual Actual Actual Actual Est. Est. Actual Actual Est. Est.2014 2015 2016 2017 2018 2019 2020 Q1-2019 Q2-2019 Q3-2019 Q4-2019

Real GDP (YOY) 2.5% 2.9% 1.6% 2.4% 2.9% 2.2% 2.1% 3.1% 2.1% 1.9% 2.2%Unemployment Rate 5.6% 5.0% 4.7% 4.1% 3.9% 3.6% 3.5% 3.8% 3.7% 3.6% 3.6%CPI (YoY) 1.6% 0.1% 1.3% 2.1% 2.4% 2.1% 2.1% 1.6% 1.7% 2.0% 2.2%Core PCE (YoY) 1.6% 1.3% 1.7% 1.6% 1.9% 1.8% 2.0% 1.5% 1.6% 1.7% 1.7%

Sources: Historical data via FactSet. Estimates (Est.) via American Enterprise Investment Services, Inc.

YoY = Year-over-year, Unemployment numbers are period ending. GDP: Gross Domestic Product; CPI: Consumer Price Index

PCE: Personal Consumption Expenditures Price Index. Core excludes food and energy Last Updated:

Quarterly

August 14, 2019



• The ISM Index numbers use 50 as a baseline; numbers above 50 indicate month-over-month expansion in the manufacturing sector while readings below, indicate contraction. Its important to note that such readings are still far from recessionary. According to the ISM, readings “above 42.9, over a period of time, generally indicates an expansion in the overall economy.”

• This is the fourth time in the current expansion that the Index has dipped below the 50 threshold. As seen in the chart below, the Index can be more volatile than measures of actual activity and they do tend to show an emotional component as the survey is filled out by humans after all.

• However, we believe the general level of U.S. manufacturing activity likely has more downside risk over the next several months. As with the economy in general, its prospects are very dependent on U.S. /China relations in our view, which do not look very encouraging right now. Additionally, most of the deceleration thus far experienced is due to a handful of issues, some of which should be relatively temporary: 1. Reduced business investment due to trade-related uncertainty (likely not temporary), 2. Reduced export demand due to slower global growth /magnified by the strong dollar (likely not temporary), 3. a need to work down inventory levels (temporary), and 4. the general halt in 737 MAX production at Boeing (temporary).

• We still believe the most likely course is one in which the U.S. economy avoids a recession over the next year or two. However, such an outcome is highly dependent on the course of U.S. /China trade developments and how consumers respond to such. Consumers appear fully capable of maintaining a sound and steady pace of spending growth, but consumption sentiment can be fickle if they perceive there to be threats to their own financial situation or family employment. The chart at right is sourced from FactSet.

FIXED INCOME NEWS & VIEWS: Brian M. Erickson, CFA, Fixed Income Research & Strategy

• Treasury Update: Ten-year Treasury yields rose solidly this morning to 1.53%, up from 1.46% at the close yesterday; attributable to hope for a constructive dialogue at upcoming U.S./China trade talks now scheduled for October and the dimming potential for Britain to crash out of the European Union next week.

10s/2s Back to Positive Territory • The spread between 10-year Treasury yields and 2-year Treasury yields turned positive this week after five

consecutive sessions in negative territory last week. While the shift to positive suggests that sentiment has a bit of a more constructive tone ahead of the latest round of policy meetings from the Fed, ECB, and BOE. Among fixed income investors, we view inversion flag as officially tripped for the current cycle, suggesting a contraction may lie ahead over the next few years. As a result, the shift back into positive territory does not change put the preverbal cat back into the sack. The inversion occurred; the flag is tripped. Could there be a dynamic that could reset the indicator in our view? Certainly, that is a possibility, but we believe that a potential catalyst for economic growth is not currently identifiable. Risks dominantly weigh to the downside at present. Those factors provide the basis for an inversion in the first place.

• From a fixed income perspective, we believe the willingness for investors to buy 10-year Treasuries at yields below 2-year Treasuries suggests a capitulation for yet another group of bond investors. We see building caution among fixed income investors, with less willingness to take on the riskiest assets and a desire to bolster quality. As a result, we recommended investors continue to evolve how they select investments to fill their fixed income allocation. Changes include squaring away fixed income liquidity, moving up in credit quality, and extending durations for total return portfolios. See our report Committee Perspectives: Selecting Fixed Income Investments dated August 23 for more detail.



• Inverting for a day is not the same as an inversion for a quarter. While we see the indicator as a binary event, a persistent inversion for weeks or months can further erode sentiment and even make the inversion a self-fulfilling prophecy. How? An inverted curve leaves an ongoing strain on risk taking. In addition to the segment of investors who firmly step back from risk with the inversion, fixed income sentiment can further deteriorate as the inversion persists.

• We believe bond markets are openminded to how the Fed and the ECB may ease policy in our view, but we see markets as likely over-priced relative to just how far the central banks may be willing to go. As a result, we see risks of missed expectations, and that a disappointment may make way for weaker demand for risk assets. Monetary stimulus alone should be measurably supportive in our view, but after nearly a decade of extraordinary policy measures combined with the slow-down in China and emerging market growth, leaves markets more vulnerable than in recent years.

10yr/2yr Treasury Yield Spread (In basis points)

Source: Bloomberg L.P.

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Ameriprise Investment Research Group Ameriprise Financial 1441 West Long Lake Road, Suite 250, Troy, MI 48098 [email protected] For additional information or to locate your nearest branch office, visit ameriprise.com RESEARCH & DUE DILIGENCE LEADER

Lyle B. Schonberger - Vice President Business Unit Compliance Liaison (BUCL)

Jeff Carlson, CLU, ChFC – Manager

Investment Research Coordinator Kimberly K. Shores Sr Administrative Assistant Jillian Willis EQUITY RESEARCH Equity Research Director Justin H. Burgin – Vice President

Consumer Goods and Services Patrick S. Diedrickson, CFA – Director

Energy/Utilities William Foley, ASIP – Director

Financial Services/REITs Lori Wilking-Przekop – Sr Director

Health Care Daniel Garofalo – Director

Industrials/Materials Frederick M. Schultz – Director

Technology/Telecommunication Curtis R. Trimble – Director

Quantitative Strategies/International Andrew R. Heaney, CFA – Director

STRATEGISTS CHIEF MARKET STRATEGIST David M. Joy – Vice President GLOBAL MARKET STRATEGIST Anthony M. Saglimbene – Vice President

Thomas Crandall, CFA, CAIA – Sr Director, Asset Allocation

Gaurav Sawhney – Research Analyst

Amit Tiwari – Sr Research Associate CHIEF ECONOMIST Russell T. Price, CFA – Vice President MANAGER RESEARCH

Michael V. Jastrow, CFA – Vice President

Jeffrey R. Lindell, CFA – Director – ETFs & CEFs

Mark Phelps, CFA – Director – Multi-Asset Solutions Equities Christine A. Pederson, CAIA, CIMA – Sr Director – Growth Equity, Infrastructure & REIT

Benjamin L. Becker, CFA – Director – International/Global Equity

Alex Zachman – Analyst – Core Equity

Cynthia Tupy, CFA – Analyst – Value and Equity Income Equity Fixed Income & Alternatives Jay C. Untiedt, CFA, CAIA – Sr Director – Alternatives

Steven T. Pope, CFA, CFP® – Director – Non-Core Fixed Income

Douglas D. Noah – Analyst – Core Taxable & Tax-Exempt Fixed Income

Blake Hockert – Associate – Reporting & Analytics

FIXED INCOME RESEARCH & STRATEGY

Fixed Income Research Brian M. Erickson, CFA – Vice President High Yield and Investment Grade Credit Jon Kyle Cartwright – Sr Director

Stephen Tufo – Director INVESTMENT DUE DILIGENCE

Justin E. Bell, CFA – Vice President

Kurt J. Merkle, CFA, CFP®, CAIA – Sr. Director

Kay S. Nachampassak – Director

Peter W. LaFontaine – Sr. Analyst

James P. Johnson, CFA, CFP® – Sr. Analyst

David Hauge, CFA – Analyst

Bishnu Dhar – Sr. Research Analyst

Parveen Vedi – Sr. Research Associate

Darakshan Ali – Research Process Trainee

INNOVATION AND DEVELOPMENT

Allen Rodrigues – Vice President

Nidhi Khandelwal – Director

Dan Bums – Sr. Manager

Matt Morgan – Sr. Manager

Natasha Wayland – Sr. Manager



The content in this report is authored by American Enterprise Investment Services Inc. (“AEIS”) and distributed by Ameriprise Financial Services, Inc. (“AFSI”) to financial advisors and clients of AFSI. AEIS and AFSI are affiliates and subsidiaries of Ameriprise Financial, Inc. Both AEIS and AFSI are member firms registered with FINRA and are subject to the objectivity safeguards and disclosure requirements relating to research analysts and the publication and distribution of research reports. The “Important Disclosures” below relate to the AEIS research analyst(s) that prepared this publication. The “Disclosures of Possible Conflicts of Interest” section, where applicable, relates to the conflicts of interest of each of AEIS and AFSI, their affiliates and their research analysts, as applicable, with respect to the subject companies mentioned in the report. Each of AEIS and AFSI have implemented policies and procedures reasonably designed to ensure that its employees involved in the preparation, content and distribution of research reports, including dually registered employees, do not influence the objectivity or timing of the publication of research report content. All research policies, coverage decisions, compensation, hiring and other personnel decisions with respect to research analysts are made by AEIS, which is operationally independent of AFSI. IMPORTANT DISCLOSURES As of June 30, 2019 The views expressed regarding the company(ies) and sector(s) featured in this publication reflect the personal views of the research analyst(s) authoring the publication. Further, no part of research analyst compensation is directly or indirectly related to the specific recommendations or views contained in this publication. A part of a research analyst’s compensation may be based upon overall firm revenue and profitability, of which investment banking, sales and trading, and principal trading are components. No part of a research analyst’s compensation is based on a specific investment banking transaction, nor is it based on sales, trading, or principal trading. A research analyst may have visited the material operations of one or more of the subject companies mentioned in this research report. No payment was received for the related travel costs. Additional information and current research disclosures on individual companies mentioned in this research report are available on our website at ameriprise.com/legal/disclosures in the Additional Ameriprise research disclosures section, or through your Ameriprise financial advisor. You may also submit a written request to Ameriprise Financial, Inc., 1441 West Long Lake Road, Troy MI, 48098. Independent third-party research on individual companies is available to clients at ameriprise.com/research-market-insights. SEC filings may be viewed at sec.gov. Tactical asset class recommendations mentioned in this report reflect The Ameriprise Global Asset Allocation Committee’s general view of the financial markets, as of the date of the report, based on then current conditions. Our tactical recommendations may differ materially from what is presented in a customized long-term financial plan or portfolio strategy. You should view our recommendations in conjunction with a broader long-term portfolio strategy. Not all products, services, or asset classes mentioned in this report may be available for sale at Ameriprise Financial Services, Inc. Please consult with your financial advisor. Diversification and Asset Allocation do not assure a profit or protect against loss. RISK FACTORS Dividend and interest payments are not guaranteed. The amount of dividend payment, if any, can vary over time and issuers may reduce or eliminate dividends paid on securities in the event of a recession or adverse event affecting a specific

industry or issuer. Should a company be unable to pay interest on a timely basis a default may occur and interruption or reduction of interest and principal occur. Investments in a narrowly focused sector may exhibit higher volatility than investments with broader objectives and is subject to market risk and economic risk. Income Risk: We note that dividends are declared solely at the discretion of the companies’ boards of directors. Dividend cuts or eliminations will likely negatively impact underlying company valuations. Published dividend yields are calculated before fees and taxes. Dividends paid by foreign companies to ADR holders may be subject to a withholding tax which could adversely affect the realized dividend yield. In certain circumstances, investors in ADR shares have the option to receive dividends in the form of cash payments, rights shares or ADR shares. Each form of dividend payment will have different tax consequences and therefore generate a different yield. In some instances, ADR holders are eligible to reclaim a portion of the withholding tax. International investing involves increased risk and volatility due to political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. Market Risk: Equity markets in general could sustain significant volatility due to several factors. As we have seen recently, both economic and geopolitical issues could have a material impact on this model portfolio and the equity market as a whole. Quantitative Strategy Risk: Stock selection and portfolio maintenance strategies based on quantitative analytics carry a unique set of risks. Quantitative strategies rely on comprehensive, accurate and thorough historical data. The Ameriprise Investment Research Group utilizes current and historical data provided by third-party data vendors. Material errors in database construction and maintenance could have an adverse effect on quantitative research and the resulting stock selection strategies. PRODUCT RISK DISCLOSURES Exchange Traded Funds (ETF) trade like stocks, are subject to investment risk and will fluctuate in market value. For additional information on individual ETFs, see available third-party research which provides additional investment highlights. SEC filings may be viewed at sec.gov

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All fixed income securities are subject to a series of risks which may include, but are not limited to: interest rate risk, call risk, refunding risk, default risk, inflations risk, liquidity risk and event risk. Please review these risks with your financial advisor to better understand how these risks may affect your investment choices. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. This means you may lose money if you sell a bond prior to maturity as a result of interest rate or other market movement. Any information relating to the income or capital gains tax treatment of financial instruments or strategies discussed herein is not intended to provide specific tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. A real estate investment trust or REIT is a company that owns and operates income-producing real estate. In addition, some REITs participate in the financing of real estate. To qualify as a REIT, a company must: I) invest at least 75% of its total assets in real estate assets, II) generate at least 75% of its gross income from real property or interest, and III) pay at least 90% of its taxable income to shareholders in the form of distributions. A company that qualifies as a REIT is permitted to deduct the distributions paid to shareholders from its corporate taxes. Consequently, many REITs target to payout at least 100% of taxable income, resulting in virtually no corporate taxes. An investment in a REIT is subject to many of the same risks as a direct investment in real estate including, but not limited to: Illiquidity and valuation complexities, redemption restrictions, distribution and diversification limits, tax consequences, fees, defaults by borrowers or tenants, market saturation, balloon payments, refinancing, bankruptcy, decreases in market rates for rents and other economic, political, or regulatory occurrences affecting the real estate industry. Ratings are provided by Moody’s Investors Services and Standard & Poor’s. Non-Investment grade securities, commonly known as "high-yield" or "junk" bonds, are historically subject to greater risk of default, including the loss of principal and interest, than higher-rated bonds, which may result in greater price volatility than experienced with a higher-rated issue. Securities offered through AFSI may not be suitable for all investors. Consult with your financial advisor for more information regarding the suitability of a particular investment. For further information on fixed income securities please refer to FINRA’s Smart Bond Investing at FINRA.org, MSRB’s Electronic Municipal Market Access at emma.msrb.org, or Investing in Bonds at investinginbonds.com. DEFINITIONS OF TERMS Agency – Agency bonds are issued by Government Sponsored Enterprises (GSE), but are NOT direct obligations of the U.S. government. Common GSE’s are the Federal Home Loan

Mortgage Corp. (Freddie Mac) Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Bank (FHLB). Beta: A measure of the risk arising from exposure to general market movements as opposed to company-specific factors. Betas in this report, unless otherwise noted, use the S&P 500 as the market benchmark and result from calculations over historic periods. A beta below 1.0, for example, can suggest the equity has tended to move with lower volatility than the broader market or, due to company-specific factors, has had higher volatility but generally low correlations with the overall market. Corporate Bonds – Are debt instruments issued by a private corporation. Non-Investment grade securities, commonly known as “high-yield” or “junk” bonds, are historically subject to greater risk of default, including the loss of principal and interest, than higher-rated bonds, which may result in greater price volatility than experienced with a higher-rated issue. Mortgage Backed Securities – Bonds are subject to prepayment risk. Yield and average lives shown consider prepayment assumptions that may not be met. Changes in payments may significantly affect yield and average life. Please contact your financial advisor for information on CMOs and how they react to different market conditions. Municipal Bonds – Interest income may be subject to state and/or local income taxes and/or the alternative minimum tax (AMT). Municipal securities subject to AMT assume a “nontaxable” status for yield calculations. Certain municipal bond income may be subject to federal income tax and are identified as “taxable”. Gains on sales/redemptions of municipal bonds may be taxed as capital gains. If the bonds are insured, the insurance pertains to the timely payment of principal (at maturity) and interest by the insurer of the underlying securities and not to the price of the bond, which will fluctuate prior to maturity. The guarantees are backed by the claims-paying ability of the listed insurance company. Treasury Securities – There is no guarantee as to the market value of these securities if they are sold prior to maturity or redemption. Price/Book: A financial ratio used to compare a company’s market share price, as of a certain date, to its book value per share. Book value relates to the accounting value of assets and liabilities in a company’s balance sheet. It is generally not a direct reflection of future earnings prospects or hard to value intangibles, such as brand, that could help generate those earnings. Price/Earnings: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by earnings per share. Trailing P/E uses the share price divided by the past four-quarters’ earnings per share. Forward P/E uses the share price as of a certain date divided by the consensus estimate of the future four-quarters’ EPS. Price/Sales: An equity valuation multiple calculated by dividing the market share price, as of a certain date, by the company’s sales per share over the most recent year.



INDEX DEFINITIONS An index is a statistical composite that is not managed. It is not possible to invest directly in an index. Definitions of individual indices mentioned in this report are available on our website at ameriprise.com/legal/disclosures in the Additional Ameriprise research disclosures section, or through your Ameriprise financial advisor. DISCLAIMER SECTION Except for the historical information contained herein, certain matters in this report are forward-looking statements or projections that are dependent upon certain risks and uncertainties, including but not limited to, such factors and considerations as general market volatility, global economic and geopolitical impacts, fiscal and monetary policy, liquidity, the level of interest rates, historical sector performance relationships as they relate to the business and economic cycle, consumer preferences, foreign currency exchange rates, litigation risk, competitive positioning, the ability to successfully integrate acquisitions, the ability to develop and commercialize new products and services, legislative risks, the pricing environment for products and services, and compliance with various local, state, and federal health care laws. See latest third-party research reports and updates for risks pertaining to a particular security. This summary is based upon financial information and statistical data obtained from sources deemed reliable, but in no way is warranted by Ameriprise Financial, Inc. as to accuracy or completeness. This is not a solicitation by Ameriprise Financial Services, Inc. of any order to buy or sell securities. This summary is based exclusively on an analysis of general current market conditions, rather than the suitability of a specific proposed securities transaction. We will not advise you as to any change in figures or our views. Past performance is not a guarantee of future results. Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. AFSI and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Ameriprise Financial Services, Inc. Member FINRA and SIPC.

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Before the Bell€¦ · resume next month is the point that Washington plans to increase tariffs to 30% from 25% on roughly $250 billion in Chinese imports starting on October 1